The NEW DEAL was a series of federal programs, public works projects,
and financial reforms and regulations enacted in the United States
during the 1930s in response to the
Great Depression . These programs
included support for farmers, the unemployed, youth, and the elderly,
as well as new constraints and safeguards on the banking industry and
changes to the monetary system. Most programs were enacted at
different stages between 1933-38, though some later. They included
both laws passed by Congress as well as presidential executive orders,
most during the first term of the Presidency of Franklin D. Roosevelt
. The programs focused on what historians refer to as the "3 Rs",
Relief, Recovery, and Reform: relief for the unemployed and poor,
recovery of the economy to normal levels, and reform of the financial
system to prevent a repeat depression .

The
New Deal produced a political realignment, making the Democratic
Party the majority (as well as the party that held the White House for
seven out of nine Presidential terms from 1933 to 1969), with its base
in liberal ideas, the South, traditional Democrats, big city machines,
and the newly empowered labor unions and ethnic minorities. The
Republicans were split, with conservatives opposing the entire New
Deal as an enemy of business and growth, and liberals accepting some
of it and promising to make it more efficient. The realignment
crystallized into the
New Deal Coalition that dominated most
presidential elections into the 1960s, while the opposing conservative
coalition largely controlled Congress from 1939 to 1964. By 1936 the
term "liberal " typically was used for supporters of the New Deal, and
"conservative " for its opponents. From 1934 to 1938, Roosevelt was
assisted in his endeavours by a "pro-spender" majority in Congress
(drawn from two-party, competitive, non-machine, Progressive, and Left
party districts). As noted by Alexander Hicks, "Roosevelt, backed by
rare, non-Southern Democrat majorities—270 non-Southern Democrat
representatives and 71 non-Southern Democrat senators—spelled Second
New Deal reform." In the 1938 midterm elections, however, Roosevelt
and his liberal supporters lost control of Congress to the bipartisan
conservative coalition.

Many historians distinguish between a "First New Deal" (1933–34)
and a "Second New Deal" (1935–38), with the second one more liberal
and more controversial. The "First New Deal" (1933–34) dealt with
the pressing banking crises through the
Emergency Banking Act and the
1933 Banking Act . The Federal Emergency Relief Administration
provided $500 million ($9.25 billion today) for relief operations by
states and cities, while the short-lived Civil Works Administration
(CWA) gave localities money to operate make-work projects in
1933–34. The
Securities Act of 1933 was enacted to prevent a
repeated stock market crash. The controversial work of the National
Recovery Administration was also part of the First New Deal.

The "
Second New Deal " in 1935–38 included the
Wagner Act to
protect labor organizing, the
Works Progress Administration (WPA)
relief program (which made the federal government by far the largest
single employer in the nation), the
Social Security Act , and new
programs to aid tenant farmers and migrant workers. The final major
items of
New Deal legislation were the creation of the United States
Housing Authority and
Farm Security Administration (FSA), both in
1937, and the
Fair Labor Standards Act of 1938 , which set maximum
hours and minimum wages for most categories of workers. The FSA was
also one of the oversight authorities of the Puerto Rico
Reconstruction Administration which administered relief efforts to
Puerto Rican citizens affected by the Great Depression.

The economic downturn of 1937–38 , and the bitter split between the
AFL and CIO labor unions led to major Republican gains in Congress in
1938. Conservative Republicans and Democrats in Congress joined in the
informal Conservative Coalition. By 1942–43 they shut down relief
programs such as the WPA and
Civilian Conservation Corps (CCC) and
blocked major liberal proposals. Roosevelt himself turned his
attention to the war effort, and won reelection in 1940 and 1944. The
Supreme Court declared the
National Recovery Administration (NRA) and
the first version of the
Agricultural Adjustment Act (AAA)
unconstitutional, however the AAA was rewritten and then upheld. As
the first Republican president elected after Franklin D. Roosevelt,
Dwight D. Eisenhower (1953–61) left the
New Deal largely intact,
even expanding it in some areas. In the 1960s,
Lyndon B. Johnson 's
Great Society used the
New Deal as inspiration for a dramatic
expansion of liberal programs, which Republican Richard M. Nixon
generally retained. After 1974, however, the call for deregulation of
the economy gained bipartisan support. The
New Deal regulation of
banking (
Glass–Steagall Act ) was suspended in the 1990s.

Many
New Deal programs remain active, with some still operating under
the original names, including the Federal Deposit Insurance
Corporation (FDIC), the
Federal Crop Insurance Corporation (FCIC), the
Federal Housing Administration (FHA), and the
Tennessee Valley
Authority (TVA). The largest programs still in existence today are the
Social Security System and the Securities and Exchange Commission
(SEC).

The phrase NEW DEAL was coined by an adviser to Roosevelt, Stuart
Chase . although the term was originally used by
Mark Twain in _A
Connecticut Yankee in King Arthur\'s Court _.

ECONOMIC COLLAPSE (1929–33)

USA annual real GDP from 1910 to 1960, with the years of the
Great Depression (1929–1939) highlighted. Unemployment rate
in the US 1910–1960, with the years of the Great Depression
(1929–1939) highlighted; accurate data begins in 1939.

From 1929 to 1933 manufacturing output decreased by one third.
Prices fell by 20%, causing deflation that made repaying debts much
harder. Unemployment in the U.S. increased from 4% to 25%.
Additionally, one-third of all employed persons were downgraded to
working part-time on much smaller paychecks. In the aggregate, almost
50% of the nation's human work-power was going unused.

Before the New Deal, there was no insurance on deposits at banks.
When thousands of banks closed, depositors lost their savings. At that
time there was no national safety net, no public unemployment
insurance, and no Social Security. Relief for the poor was the
responsibility of families, private charity, and local governments,
but as conditions worsened year by year, demand skyrocketed and their
combined resources increasingly fell far short of demand.

The depression had devastated the nation. As Roosevelt took the oath
of office at noon on March 4, 1933, all state governors had authorized
bank holidays or restricted withdrawals; many Americans had little or
no access to their bank accounts. The unemployment rate was about
25% and higher in major industrial and mining centers. Farm income had
fallen by over 50% since 1929. 844,000 nonfarm mortgages had been
foreclosed, 1930–33, out of five million in all. Political and
business leaders feared revolution and anarchy. Joseph P. Kennedy, Sr.
, who remained wealthy during the Depression, stated years later that
"in those days I felt and said I would be willing to part with half of
what I had if I could be sure of keeping, under law and order, the
other half".

NEW DEAL (1933–38)

Upon accepting the 1932 Democratic nomination for president, Franklin
Roosevelt promised "a new deal for the American people".

“
Throughout the nation men and women, forgotten in the political
philosophy of the Government, look to us here for guidance and for
more equitable opportunity to share in the distribution of national
wealth... I pledge myself to a new deal for the American people. This
is more than a political campaign. It is a call to arms.
”

Roosevelt entered office without a specific set of plans for dealing
with the Great Depression; so he improvised as Congress listened to a
very wide variety of voices. Among Roosevelt's more famous advisers
was an informal "
Brain Trust ": a group that tended to view pragmatic
government intervention in the economy positively. His choice for
Secretary of Labor ,
Frances Perkins , greatly influenced his
initiatives. Her list of what her priorities would be if she took the
job illustrates: "a forty-hour workweek, a minimum wage, worker's
compensation, unemployment compensation, a federal law banning child
labor, direct federal aid for unemployment relief, Social Security, a
revitalized public employment service and health insurance."

The
New Deal policies drew from many different ideas proposed earlier
in the 20th century. Assistant Attorney General
Thurman Arnold led
efforts that hearkened back to an anti-monopoly tradition rooted in
American politics by figures such as Andrew Jackson and Thomas
Jefferson. Supreme Court Justice
Louis Brandeis , an influential
adviser to many New Dealers, argued that "bigness" (referring,
presumably, to corporations) was a negative economic force, producing
waste and inefficiency. However, the anti-monopoly group never had a
major impact on
New Deal policy. Other leaders such as Hugh S.
Johnson of the NRA took ideas from the
Woodrow Wilson Administration,
advocating techniques used to mobilize the economy for
World War I .
They brought ideas and experience from the government controls and
spending of 1917–18. Other
New Deal planners revived experiments
suggested in the 1920s, such as the TVA.

The "First New Deal" (1933–34) encompassed the proposals offered by
a wide spectrum of groups. (Not included was the Socialist Party ,
whose influence was all but destroyed.) This first phase of the New
Deal was also characterized by fiscal conservatism (see
Economy Act ,
below) and experimentation with several different, sometimes
contradictory, cures for economic ills. The consequences were uneven.
Some programs, especially the
National Recovery Administration (NRA)
and the silver program, have been widely seen as failures. Other
programs lasted about a decade; some became permanent. The economy
shot upward, with Roosevelt's first term marking one of the fastest
periods of GDP growth in history. Though a downturn in 1937–38
raised questions about just how successful the policies were, the
great majority of economists and historians agree that they were an
overall benefit.

The
New Deal faced some vocal conservative opposition. The first
organized opposition in 1934 came from the
American Liberty League led
by conservative Democrats such as 1924 and 1928 presidential
candidates
John W. Davis and
Al Smith . There was also a large but
loosely affiliated group of
New Deal opponents, who are commonly
called the Old Right . This group included politicians, intellectuals,
writers, and newspaper editors of various philosophical persuasions
including classical liberals and conservatives, both Democrats and
Republicans. A number of leading Democrats, who were progressives of
the
Woodrow Wilson era, were also critical of Roosevelt's New Deal
policies. According to James T. Patterson, these leaders "were
essentially progressives of the New Freedom vintage. They continued to
believe that their party stood for Wilsonian ideals: regulated
competition, states' rights, and individual freedom where it did not
impinge upon the liberty of others," and saw themselves as "the true
progressives and as the bulwarks of a party which they felt would have
collapsed without them in the 1920's."

The
New Deal represented a significant shift in politics and domestic
policy . It especially led to greatly increased federal regulation of
the economy. It also marked the beginning of complex social programs
and growing power of labor unions. The effects of the
New Deal remain
a source of controversy and debate among economists and historians.

There were dozens of new agencies created by Roosevelt through
Executive Orders. They are typically known by their alphabetical
initials.

THE FIRST 100 DAYS (1933)

Main article: First 100 days of Franklin D. Roosevelt\'s presidency

The American people were generally extremely dissatisfied with the
crumbling economy, mass unemployment, declining wages and profits and
especially Hoover 's policies such as the Smoot–Hawley Tariff Act
and the
Revenue Act of 1932 . Roosevelt entered office with enormous
political capital . Americans of all political persuasions were
demanding immediate action, and Roosevelt responded with a remarkable
series of new programs in the "first hundred days" of the
administration, in which he met with Congress for 100 days. During
those 100 days of lawmaking, Congress granted every request Roosevelt
asked, and passed a few programs (such as the FDIC to insure bank
accounts) that he opposed. Ever since, presidents have been judged
against
Franklin D. Roosevelt for what they accomplished in their
first 100 days.
Walter Lippmann famously noted:

At the end of February we were a congeries of disorderly
panic-stricken mobs and factions. In the hundred days from March to
June we became again an organized nation confident of our power to
provide for our own security and to control our own destiny.

The economy had hit bottom in March 1933 and then started to expand.
Economic indicators show the economy reached nadir in the first days
of March, then began a steady, sharp upward recovery. Thus the Federal
Reserve Index of Industrial Production sank to its lowest point of
52.8 in July 1932 (with 1935–39 = 100) and was practically unchanged
at 54.3 in March 1933; however by July 1933, it reached 85.5, a
dramatic rebound of 57% in four months. Recovery was steady and strong
until 1937. Except for employment, the economy by 1937 surpassed the
levels of the late 1920s. The
Recession of 1937 was a temporary
downturn. Private sector employment, especially in manufacturing,
recovered to the level of the 1920s but failed to advance further
until the war. The U.S. population was 124,840,471 in 1932 and
128,824,829 in 1937, an increase of 3,984,468. The ratio of these
numbers, times the number of jobs in 1932, means there was a need for
938,000 more 1937 jobs to maintain the same employment level.

Fiscal Policy

The
Economy Act , drafted by Budget Director
Lewis Williams Douglas ,
was passed on March 14, 1933. The act proposed to balance the
"regular" (non-emergency) federal budget by cutting the salaries of
government employees and cutting pensions to veterans by fifteen
percent. It saved $500 million per year and reassured deficit hawks,
such as Douglas, that the new President was fiscally conservative.
Roosevelt argued there were two budgets: the "regular" federal budget,
which he balanced, and the _emergency budget_, which was needed to
defeat the depression. It was imbalanced on a temporary basis.

Roosevelt initially favored balancing the budget, but soon found
himself running spending deficits to fund his numerous programs.
Douglas, however—rejecting the distinction between a regular and
emergency budget—resigned in 1934 and became an outspoken critic of
the New Deal. Roosevelt strenuously opposed the Bonus Bill that would
give
World War I veterans a cash bonus. Congress finally passed it
over his veto in 1936, and the Treasury distributed $1.5 billion in
cash as bonus welfare benefits to 4 million veterans just before the
1936 election.

New Dealers never accepted the Keynesian argument for government
spending as a vehicle for recovery. Most economists of the era, along
with Henry Morgenthau of the Treasury Department, rejected Keynesian
solutions and favored balanced budgets.

Banking Reform

_ Crowd at New York's American Union Bank during a bank run early
in the Great Depression.

Roosevelt's ebullient public personality, conveyed through
his declaration that "the only thing we have to fear is fear itself"
and his "fireside chats" on the radio did a great deal to help restore
the nation's confidence.
Fireside Chat 1 On the Banking Crisis Roosevelt's first
Fireside Chat on the Banking Crisis (March 12, 1933)
-------------------------

Problems playing this file? See media help ._

At the beginning of the
Great Depression the economy was destabilized
by bank failures followed by credit crunches . The initial reasons
were substantial losses in investment banking, followed by bank runs .
(Bank runs occurred when a large number of customers withdrew their
deposits because they believed the bank might become insolvent. As the
bank run progressed, it generated a self-fulfilling prophecy: as more
people withdrew their deposits, the likelihood of default increased,
and this encouraged further withdrawals.)
Milton Friedman and Anna
Schwartz have argued that the drain of money out of the banking system
caused the monetary supply to shrink, forcing the economy to likewise
shrink. As credit and economic activity diminished, price deflation
followed, causing further economic contraction with disastrous impact
on banks. Between 1929 and 1933 40% of all banks (9,490 out of 23,697
banks) failed. Much of the
Great Depression 's economic damage was
caused directly by bank runs.

Herbert Hoover had already considered a _bank holiday_ to prevent
further bank runs, but rejected the idea because he was afraid to trip
a panic. Roosevelt, however, gave a radio address, held in the
atmosphere of a
Fireside Chat , and explained to the public in simple
terms the causes of the banking crisis, what the government will do
and how the population could help. He closed all the banks in the
country and kept them all closed until he could pass new legislation.

On March 9, 1933, Roosevelt sent to Congress the Emergency Banking
Act , drafted in large part by Hoover's top advisors. The act was
passed and signed into law the same day. It provided for a system of
reopening sound banks under Treasury supervision, with federal loans
available if needed. Three-quarters of the banks in the Federal
Reserve System reopened within the next three days. Billions of
dollars in hoarded currency and gold flowed back into them within a
month, thus stabilizing the banking system. By the end of 1933, 4,004
small local banks were permanently closed and merged into larger
banks. Their deposits totalled $3.6 billion; depositors lost a total
of $540 million, and eventually received on average 85 cents on the
dollar of their deposits; it is a common myth that they received
nothing back. The
Glass–Steagall Act limited commercial bank
securities activities and affiliations between commercial banks and
securities firms to regulate speculations. It also established the
Federal Deposit Insurance Corporation (FDIC), which insured deposits
for up to $2,500, ending the risk of runs on banks.

This banking reform offered unprecedented stability: While throughout
the 1920s more than five hundred banks failed per year; it was less
than ten banks per year after 1933.

Monetary Reform

Under the gold standard , the United States kept the Dollar
convertible to gold. The
Federal Reserve would have had to execute an
expansionary monetary policy to fight the deflation and to inject
liquidity into the banking system to prevent it from crumbling—but
lower interest rates would have led to a gold outflow. Under the gold
standards price–specie flow mechanism countries that lost gold but
nevertheless wanted to maintain the gold standard had to permit their
money supply to decrease and the domestic price level to decline
(deflation ). As long as the
Federal Reserve had to defend the gold
parity of the Dollar it had to sit idle while the banking system
crumbled.

In March and April in a series of laws and executive orders, the
government suspended the gold standard . Roosevelt stopped the outflow
of gold by forbidding the export of gold except under license from the
Treasury. Anyone holding significant amounts of gold coinage was
mandated to exchange it for the existing fixed price of US dollars.
The Treasury no longer paid out gold in exchange for dollars, and gold
would no longer be considered valid legal tender for debts in private
and public contracts.

The dollar was allowed to float freely on foreign exchange markets
with no guaranteed price in gold. With the passage of the Gold Reserve
Act in 1934 the nominal price of gold was changed from $20.67 per troy
ounce to $35. These measures enabled the
Federal Reserve to increase
the amount of money in circulation to the level the economy needed.
Markets immediately responded well to the suspension, in the hope that
the decline in prices would finally end. In her essay "What ended the
Great Depression?" (1992)
Christina Romer argued that this policy
raised industrial production by 25% until 1937 and by 50% until 1942.

Securities Act Of 1933

Before the
Wall Street Crash of 1929 , there was no regulation of
securities at the federal level. Even firms whose securities were
publicly traded published no regular reports or even worse rather
misleading reports based on arbitrarily selected data. To avoid
another
Wall Street Crash the
Securities Act of 1933 was enacted. It
required the disclosure of the balance sheet, profit and loss
statement, the names and compensations of corporate officers, about
firms whose securities were traded. Additionally those reports had to
be verified by independent auditors. In 1934 the U.S. Securities and
Exchange Commission was established to regulate the stock market and
prevent corporate abuses relating to the sale of securities and
corporate reporting.

Repeal Of Prohibition

In a measure that garnered substantial popular support for his New
Deal, Roosevelt moved to put to rest one of the most divisive cultural
issues of the 1920s. He signed the bill to legalize the manufacture
and sale of alcohol, an interim measure pending the repeal of
Prohibition , for which a constitutional amendment of repeal (the 21st
) was already in process. The repeal amendment was ratified later in
1933. States and cities gained additional new revenue, and Roosevelt
secured his popularity especially in the cities and ethnic areas by
helping the beer start flowing.

RELIEF

Relief was the immediate effort to help the one-third of the
population that was hardest hit by the depression. Also, relief was
aimed at providing temporary help to suffering and unemployed
Americans.

To prime the pump and cut unemployment, the NIRA created the Public
Works Administration (PWA), a major program of public works, which
organized and provided funds for the building of useful works such as
government buildings, airports, hospitals, schools, roads, bridges,
and dams. From 1933 to 1935 PWA spent $3.3 billion with private
companies to build 34,599 projects, many of them quite large.

Under Roosevelt, many unemployed persons were put to work on a wide
range of government financed public works projects, building bridges,
airports, dams, post offices, courthouses, and thousands of miles of
road. Through reforestation and flood control, they reclaimed millions
of hectares of soil from erosion and devastation. As noted by one
authority, Roosevelt's
New Deal "was literally stamped on the American
landscape".

Rural America was a high priority for Roosevelt and his energetic
Secretary of Agriculture,
Henry A. Wallace . Roosevelt believed that
full economic recovery depended upon the recovery of agriculture, and
raising farm prices was a major tool, even though it meant higher food
prices for the poor living in cities.

Many rural people lived in severe poverty, especially in the South.
Major programs addressed to their needs included the Resettlement
Administration (RA), the
Rural Electrification Administration (REA),
rural welfare projects sponsored by the WPA, National Youth
Administration (NYA), Forest Service and Civilian Conservation Corps
(CCC), including school lunches, building new schools, opening roads
in remote areas, reforestation, and purchase of marginal lands to
enlarge national forests. In 1933, the Administration launched the
Tennessee Valley Authority , a project involving dam construction
planning on an unprecedented scale to curb flooding, generate
electricity, and modernize poor farms in the
Tennessee Valley region
of the Southern United States. Under the Farmers' Relief Act of 1933,
the government paid compensation to farmers who reduced output,
thereby rising prices. As a result of this legislation, the average
income of farmers almost doubled by 1937.

In the 1920s farm production had increased dramatically thanks to
mechanization, more potent insecticides and increased use of
fertilizer. Due to an overproduction of agricultural products farmers
faced a severe and chronic agricultural depression throughout the
1920s. The
Great Depression even worsened the agricultural crises. At
the beginning of 1933 agricultural markets nearly faced collapse.
Farm prices were so low that, as an example, in Montana wheat was
rotting in the fields because it could not be profitably harvested. In
Oregon sheep were slaughtered and left to the buzzards because meat
prices were not sufficient to warrant transportation to markets.

Roosevelt was keenly interested in farm issues and believed that true
prosperity would not return until farming was prosperous. Many
different programs were directed at farmers. The first 100 days
produced the Farm Security Act to raise farm incomes by raising the
prices farmers received, which was achieved by reducing total farm
output. The
Agricultural Adjustment Act created the Agricultural
Adjustment Administration (AAA) in May 1933. The act reflected the
demands of leaders of major farm organizations, especially the Farm
Bureau , and reflected debates among Roosevelt's farm advisers such as
Secretary of Agriculture Henry A. Wallace,
M.L. Wilson , Rexford
Tugwell , and
George Peek .

The AAA aimed to raise prices for commodities through artificial
scarcity . The AAA used a system of _domestic allotments_, setting
total output of corn, cotton, dairy products, hogs, rice, tobacco, and
wheat. The farmers themselves had a voice in the process of using
government to benefit their incomes. The AAA paid land owners
subsidies for leaving some of their land idle with funds provided by a
new tax on food processing. To force up farm prices to the point of
"parity," 10 million acres (40,000 km2) of growing cotton was plowed
up, bountiful crops were left to rot, and six million piglets were
killed and discarded.

The idea was to give farmers a "fair exchange value" for their
products in relation to the general economy ("parity level"). Farm
incomes and the income for the general population recovered fast since
the beginning of 1933. Still, food prices remained well below the
1929 peak.

The AAA established an important and long-lasting federal role in the
planning on the entire agricultural sector of the economy and was the
first program on such a scale on behalf of the troubled agricultural
economy. The original AAA did not provide for any sharecroppers or
tenants or farm laborers who might become unemployed, but there were
other
New Deal programs especially for them.

A
Gallup Poll printed in the _
Washington Post _ revealed that a
majority of the American public opposed the AAA. In 1936, the Supreme
Court declared the AAA to be unconstitutional , stating that "a
statutory plan to regulate and control agricultural production, a
matter beyond the powers delegated to the federal government". The AAA
was replaced by a similar program that did win Court approval. Instead
of paying farmers for letting fields lie barren, this program instead
subsidized them for planting soil enriching crops such as alfalfa that
would not be sold on the market. Federal regulation of agricultural
production has been modified many times since then, but together with
large subsidies is still in effect today.

The Farm Tenancy Act in 1937 was the last major
New Deal legislation
that concerned farming. It, in turn, created the Farm Security
Administration (FSA), which replaced the Resettlement Administration.

The Food Stamp Plan —a major new welfare program for urban
poor—was established in 1939 to provide stamps to poor people who
could use them to purchase food at retail outlets. The program ended
during wartime prosperity in 1943, but was restored in 1961. It
survived into the 21st century with little controversy because it was
seen to benefit the urban poor, food producers, grocers and
wholesalers, as well as farmers. Thus it gained support from both
liberal and conservative Congressmen. In 2013, however, Tea Party
activists in the House tried to end the program, now known as the
Supplemental Nutrition Assistance Program , while the Senate fought to
preserve it.

RECOVERY

Recovery was the effort in numerous programs to restore the economy
to normal health. By most economic indicators this was achieved by
1937—except for unemployment, which remained stubbornly high until
World War II began. Recovery was designed to help the economy bounce
back from depression.

Roosevelt's advisers believed that excessive competition and
technical progress had led to overproduction and lowered wages and
prices, which they believed lowered demand and employment (Deflation
). He argued that government economic planning was necessary to remedy
this:

...A mere builder of more industrial plants, a creator of more
railroad systems, an organizer of more corporations, is as likely to
be a danger as a help. Our task is not ... necessarily producing more
goods. It is the soberer, less dramatic business of administering
resources and plants already in hand.

From 1929 to 1933, the industrial economy had been suffering from a
vicious cycle of deflation . Since 1931, the U.S. Chamber of Commerce
, the voice of the nation's organized business, promoted an
anti-deflationary scheme that would permit trade associations to
cooperate in government-instigated cartels to stabilize prices within
their industries. While existing antitrust laws clearly forbade such
practices, organized business found a receptive ear in the Roosevelt
Administration.

New Deal economists argued that cut-throat competition had hurt many
businesses and that with prices having fallen 20% and more,
"deflation" exacerbated the burden of debt and would delay recovery.
They rejected a strong move in Congress to limit the workweek to 30
hours. Instead their remedy, designed in cooperation with big business
, was the NIRA. It included stimulus funds for the WPA to spend, and
sought to raise prices, give more bargaining power for unions (so the
workers could purchase more) and reduce harmful competition. At the
center of the NIRA was the
National Recovery Administration (NRA),
headed by former General
Hugh S. Johnson , who had been a senior
economic official in World War I. Johnson called on every business
establishment in the nation to accept a stopgap "blanket code": a
minimum wage of between 20 and 45 cents per hour, a maximum workweek
of 35–45 hours, and the abolition of child labor . Johnson and
Roosevelt contended that the "blanket code" would raise consumer
purchasing power and increase employment.

To mobilize political support for the NRA, Johnson launched the "NRA
Blue Eagle " publicity campaign to boost what he called "industrial
self-government". The NRA brought together leaders in each industry to
design specific sets of codes for that industry; the most important
provisions were anti-deflationary floors below which no company would
lower prices or wages, and agreements on maintaining employment and
production. In a remarkably short time, the NRA announced agreements
from almost every major industry in the nation. By March 1934,
industrial production was 45% higher than in March 1933. Donald
Richberg , who soon replaced Johnson as the head of the NRA, said:

There is no choice presented to American business between
intelligently planned and uncontrolled industrial operations and a
return to the gold-plated anarchy that masqueraded as "rugged
individualism" ... Unless industry is sufficiently socialized by its
private owners and managers so that great essential industries are
operated under public obligation appropriate to the public interest in
them, the advance of political control over private industry is
inevitable. Manufacturing employment in the United States from
1920 to 1940

By the time NRA ended in May 1935, industrial production was 55%
higher than in May 1933. In addition, well over 2 million employers
accepted the new standards laid down by the NRA, which had introduced
a minimum wage and an eight-hour workday , together with abolishing
child labor. On May 27, 1935, the NRA was found to be
unconstitutional by a unanimous decision of the U.S. Supreme Court in
the case of _
Schechter v. United States _. On that same day, the Court
unanimously struck down the Frazier-Lemke Act portion of the New Deal
as unconstitutional. After the end of the NRA quotas in the oil
industry were fixed by the
Railroad Commission of Texas with Tom
Connally 's federal Hot Oil Act of 1935 , which guaranteed that
illegal "hot oil" would not be sold.

Employment in private sector factories recovered to the level of the
late 1920s by 1937 but did not grow much bigger until the war came and
manufacturing employment leaped from 11 million in 1940 to 18 million
in 1943.

Housing Sector

The
New Deal had an important impact in the housing field. The New
Deal followed and increased President Hoover's lead and seek measures.
The
New Deal sought to stimulate the private home building industry
and increase the number of individuals who owned homes. The New Deal
implemented two new housing agencies; Home Owners\' Loan Corporation
(HOLC) and the
Federal Housing Administration (FHA). HOLC set uniform
national appraisal methods and simplified the mortgage process. The
Federal Housing Administration (FHA) created national standards for
home construction.

REFORM

Reform was based on the assumption that the depression was caused by
the inherent instability of the market and that government
intervention was necessary to rationalize and stabilize the economy,
and to balance the interests of farmers, business and labor. Reforms
targeted the causes of the depression and sought to prevent a crisis
like it from happening again. In other words, financially rebuilding
the U.S. while ensuring not to repeat history.

Trade Liberalization

There is consensus amongst economic historians that protectionist
policies, culminating in the Smoot-Hawley Act of 1930 , worsened the
Depression.
Franklin D. Roosevelt already spoke against the act while
campaigning for president during 1932. In 1934 the Reciprocal Tariff
Act was drafted by
Cordell Hull . It gave the president power to
negotiate bilateral, reciprocal trade agreements with other countries.
The act enabled Roosevelt to liberalize American trade policy around
the globe. It is widely credited with ushering in the era of liberal
trade policy that persists to this day.

Puerto Rico

A separate set of programs operated in
Puerto Rico , headed by the
Puerto Rico Reconstruction Administration . It promoted land reform
and helped small farms; it set up farm cooperatives, promoted crop
diversification, and helped local industry. The Puerto Rico
Reconstruction Administration was directed by Juan Pablo Montoya Sr.
from 1935 to 1937.

In the spring of 1935, responding to the setbacks in the Court, a new
skepticism in Congress, and the growing popular clamor for more
dramatic action, the Administration proposed or endorsed several
important new initiatives. Historians refer to them as the "Second New
Deal" and note that it was more liberal and more controversial than
the "First New Deal" of 1933–34.

SOCIAL SECURITY ACT

A poster publicizing Social Security benefits.

Until 1935 there were just a dozen states that had old age insurance
laws but these programs were woefully underfunded and therefore almost
worthless. Just one state (Wisconsin) had an insurance program. The
United States was the only modern industrial country where people
faced the Depression without any national system of social security.
Even the work programs of the "First New Deal" were just meant as
immediate relief, destined to run less than a decade.

The most important program of 1935, and perhaps the
New Deal as a
whole, was the
Social Security Act , drafted by
Frances Perkins . It
established a permanent system of universal retirement pensions
(Social Security ), unemployment insurance , and welfare benefits for
the handicapped and needy children in families without a father
present. It established the framework for the U.S. welfare system.
Roosevelt insisted that it should be funded by payroll taxes rather
than from the general fund; he said, "We put those payroll
contributions there so as to give the contributors a legal, moral, and
political right to collect their pensions and unemployment benefits.
With those taxes in there, no damn politician can ever scrap my social
security program."

Compared to the social security systems in western European
countries, the
Social Security Act of 1935 was rather conservative.
But for the first time the federal government took responsibility for
the economic security of the aged, the temporarily unemployed,
dependent children and the handicapped.

LABOR RELATIONS

The
National Labor Relations Act of 1935, also known as the Wagner
Act , finally guaranteed workers the rights to collective bargaining
through unions of their own choice. The Act also established the
National Labor Relations Board (NLRB) to facilitate wage agreements
and to suppress the repeated labor disturbances. The
Wagner Act did
not compel employers to reach agreement with their employees, but it
opened possibilities for American labor. The result was a tremendous
growth of membership in the labor unions, especially in the
mass-production sector, composing the
American Federation of Labor .
Labor thus became a major component of the
New Deal political
coalition.

The
Fair Labor Standards Act of 1938 set maximum hours (44 per week)
and minimum wages (25 cents per hour) for most categories of workers.
Child labour of children under the age of 16 was forbidden, children
under 18 years were forbidden to work in hazardous employment. As a
result, the wages of 300,000 people were increased and the hours of
1.3 million were reduced. It was the last major
New Deal legislation
that Roosevelt succeeded in enacting into law before the Conservative
Coalition of Republicans and conservative Democrats won control of
Congress that year. While he could usually use the veto to restrain
Congress, it could block any Roosevelt legislation it disliked.

Roosevelt nationalized unemployment relief through the Works Progress
Administration (WPA), headed by close friend
Harry Hopkins . Roosevelt
had insisted that the projects had to be costly in terms of labor,
long-term beneficial, and the WPA was forbidden to compete with
private enterprises (therefore the workers had to be paid smaller
wages). The
Works Progress Administration (WPA) was created to return
the unemployed to the work force. The WPA financed a variety of
projects such as hospitals, schools, and roads, and employed more
than 8.5 million workers who built 650,000 miles of highways and
roads, 125,000 public buildings, as well as bridges, reservoirs,
irrigation systems, parks, playgrounds and so on.

Prominent projects were the
Lincoln Tunnel , the
Triborough Bridge ,
the
LaGuardia Airport , the
Overseas Highway and the San
Francisco–Oakland Bay Bridge . The Rural Electrification
Administration used co-ops to bring electricity to rural areas, many
of which still operate. The
National Youth Administration was another
the semi-autonomous WPA program for youth. Its Texas director, Lyndon
Baines Johnson , later used the NYA as a model for some of his Great
Society programs in the 1960s. The WPA was organized by states, but
New York City had its own branch Federal One, which created jobs for
writers, musicians, artists, and theater personnel. It became a
hunting ground for conservatives searching for Communist employees.

The Federal Writers\' Project operated in every state, where it
created a famous guide book; it also catalogued local archives and
hired many writers, including
Margaret Walker ,
Zora Neale Hurston ,
and
Anzia Yezierska , to document folklore. Other writers interviewed
elderly ex-slaves and recorded their stories. Under the Federal
Theater Project, headed by charismatic
Hallie Flanagan , actresses and
actors, technicians, writers, and directors put on stage productions.
The tickets were inexpensive or sometimes free, making theater
available to audiences unaccustomed to attending plays. One Federal
Art Project paid 162 trained woman artists on relief to paint murals
or create statues for newly built post offices and courthouses. Many
of these works of art can still be seen in public buildings around the
country, along with murals sponsored by the Treasury Relief Art
Project of the Treasury Department. During its existence, the
Federal Theatre Project provided jobs for circus people, musicians,
actors, artists, and playwrights, together with increasing public
appreciation of the arts.

TAX POLICY

In 1935, Roosevelt called for a tax program called the _Wealth Tax
Act_ (
Revenue Act of 1935 ) to redistribute wealth. The bill imposed
an income tax of 79% on incomes over $5 million. Since that was an
extraordinary high income in the 1930s, the highest tax rate actually
covered just one individual –
John D. Rockefeller . The bill was
expected to raise only about $250 million in additional funds, so
revenue was not the primary goal. Morgenthau called it "more or less a
campaign document". In a private conversation with Raymond Moley,
Roosevelt admitted that the purpose of the bill was "stealing Huey
Long 's thunder" by making Long's supporters his own. At the same
time, it raised the bitterness of the rich who called Roosevelt "a
traitor to his class" and the wealth tax act a "soak the rich tax".

A tax called the undistributed profits tax was enacted in 1936. This
time the primary purpose was revenue, since Congress had enacted the
Adjusted Compensation Payment Act , calling for payments of $2 billion
to
World War I veterans. The bill established the persisting principle
that retained corporate earnings could be taxed. Paid dividends were
tax deductible by corporations. Its proponents intended the bill to
replace all other corporation taxes—believing this would stimulate
corporations to distribute earnings and thus put more cash and
spending power in the hands of individuals. In the end, Congress
watered down the bill, setting the tax rates at 7 to 27% and largely
exempting small enterprises. Facing widespread and fierce criticism,
the tax deduction of paid dividends was repealed in 1938.

When Roosevelt took office a majority of the nine judges of the
Supreme Court were appointed by Republican Party Presidents. Four
especially conservative judges (nicknamed the Four Horsemen ) often
managed to convince the fifth judge
Owen Roberts to strike down
progressive legislation. Roosevelt increasingly saw the issue of the
Supreme Court as one of unelected officials stifling the work of a
democratically elected government. Early in the year 1937, he asked
Congress to pass the
Judiciary Reorganization Bill of 1937 . That
proposal would have given the president the power to appoint a new
justice whenever an existing judge reached the age of 70 and failed to
retire within six months. In that way Roosevelt hoped to preserve the
New Deal legislation. But he had stirred up a hornet's nest since many
congressmen feared he might start to retire them at 70 next. Many
congressmen considered the proposal unconstitutional. In the end the
proposal failed.

"When
The Gallup Organization 's poll in 1939 asked, 'Do you think
the attitude of the Roosevelt administration toward business is
delaying business recovery?' the American people responded 'yes' by a
margin of more than two-to-one. The business community felt even more
strongly so." _Fortune\'_s Roper poll found in May 1939 that 39% of
Americans thought the administration had been delaying recovery by
undermining business confidence, while 37% thought it had not. But it
also found that opinions on the issue were highly polarized by
economic status and occupation. In addition, AIPO found in the same
time that 57% believed that business attitudes toward the
administration were delaying recovery, while 26% thought they were
not, emphasizing that fairly subtle differences in wording can evoke
substantially different polling responses.

Keynesian economists stated that the recession of 1937 was a result
of a premature effort to curb government spending and balance the
budget.

Roosevelt had been cautious not to run large deficits. In 1937 he
actually achieved a balanced budget. Therefore, he did not fully
utilize deficit spending . Between 1933 and 1941 the average federal
budget deficit was 3% per year.

In November 1937 Roosevelt decided that big business were trying to
ruin the
New Deal by causing another depression that voters would
react against by voting Republican. It was a "capital strike" said
Roosevelt, and he ordered the
Federal Bureau of Investigation to look
for a criminal conspiracy (they found none). Roosevelt moved left and
unleashed a rhetorical campaign against monopoly power, which was cast
as the cause of the new crisis. Ickes attacked automaker
Henry Ford ,
steelmaker Tom Girdler , and the super rich "Sixty Families " who
supposedly comprised "the living center of the modern industrial
oligarchy which dominates the United States".

Left unchecked, Ickes warned, they would create "big-business Fascist
America—an enslaved America". The President appointed Robert Jackson
as the aggressive new director of the antitrust division of the
Justice Department , but this effort lost its effectiveness once World
War II began and big business was urgently needed to produce war
supplies. But the Administration's other response to the 1937 dip that
stalled recovery from the
Great Depression had more tangible results.

Ignoring the requests of the Treasury Department and responding to
the urgings of the converts to
Keynesian economics and others in his
Administration, Roosevelt embarked on an antidote to the depression,
reluctantly abandoning his efforts to balance the budget and launching
a $5 billion spending program in the spring of 1938, an effort to
increase mass purchasing power. Roosevelt explained his program in a
fireside chat in which he told the American people that it was up to
the government to "create an economic upturn" by making "additions to
the purchasing power of the nation".

The U.S. reached full employment after entering
World War II in
December 1941. Under the special circumstances of war mobilization,
massive war spending doubled the GNP (
Gross National Product ).
Military Keynesianism brought full employment . Federal contracts were
cost-plus. Instead of competitive bidding to get lower prices, the
government gave out contracts that promised to pay all the expenses
plus a modest profit. Factories hired everyone they could find
regardless of their lack of skills; they simplified work tasks and
trained the workers, with the federal government paying all the costs.
Millions of farmers left marginal operations, students quit school,
and housewives joined the labor force.

The emphasis was for war supplies as soon as possible, regardless of
cost and inefficiencies. Industry quickly absorbed the slack in the
labor force, and the tables turned such that employers needed to
actively and aggressively recruit workers. As the military grew, new
labor sources were needed to replace the 12 million men serving in the
military. Propaganda campaigns started pleading for people to work in
the war factories. The barriers for married women, the old, the
unskilled—and (in the North and West) the barriers for racial
minorities—were lowered.

FEDERAL BUDGET SOARS

In 1929, federal expenditures accounted for only 3% of GNP. Between
1933 and 1939, federal expenditures tripled, but the national debt as
a percent of GNP showed little change. Spending on the war effort
quickly eclipsed spending on
New Deal programs. In 1944 government
spending on the war effort exceeded 40% of GNP. The US economy
experienced dramatic growth during the Second World War mostly due to
the deemphasis of free enterprise in favor of the imposition of strict
controls on prices and wages. These controls shared broad support
among Labor and Business, resulting in cooperation between the two
groups and the Federal Government. This cooperation resulted in the
government subsidizing business and labor through both direct and
indirect methods.

WARTIME WELFARE PROJECTS

Conservative domination of Congress during the war meant that all
welfare projects and reforms had to have their approval, which was
given when business supported the project. For example, the Coal Mines
Inspection and Investigation Act of 1941 significantly reduced
fatality rates in the coal-mining industry, saving workers' lives and
company money. In terms of welfare the New Dealers wanted benefits
for everyone according to need. Conservatives, however, proposed
benefits based on national service—especially tied to military
service or working in war industries—and their approach won out.

The Community Facilities Act of 1940 (the LANHAM ACT) provided
federal funds to defense-impacted communities where the population had
soared and local facilities were overwhelmed. It provided money for
the building of housing for war workers as well as recreational
facilities, water and sanitation plants, hospitals, day care centers,
and schools.

The Servicemen's Dependents Allowance Act of 1942 provided family
allowances for dependents of enlisted men. Emergency grants to States
were authorized in 1942 for programs for day care for children of
working mothers. In 1944, pensions were authorized for all physically
or mentally helpless children of deceased veterans regardless of the
age of the child at the date the claim was filed or at the time of the
veteran's death, provided the child was disabled at the age of sixteen
and that the disability continued to the date of the claim. The Public
Health Service Act, which was passed that same year, expanded
Federal-State public health programs, and increased the annual amount
for grants for public health services.

The Emergency Maternity and Infant Care Program (EMIC), introduced in
March 1943 by the Children\'s Bureau , provided free maternity care
and medical treatment during an infant's first year for the wives and
children of military personnel in the four lowest enlisted pay grades.
One out of seven births was covered during its operation. EMIC paid
$127 million to state health departments to cover the care of 1.2
million new mothers and their babies. The average cost of EMIC
maternity cases completed was $92.49 for medical and hospital care. A
striking effect was the sudden rapid decline in home births, as most
mothers now had paid hospital maternity care.

Under the 1943 Disabled Veterans Rehabilitation Act, vocational
rehabilitation services were offered to wounded
World War II veterans,
and some 621,000 veterans would go on to receive assistance under this
program.

The G.I. BILL (Servicemen\'s Readjustment Act of 1944 ) was a
landmark piece of legislation, providing 16 million returning veterans
with benefits such as housing, educational, and unemployment
assistance, and played a major role in the postwar expansion of the
American middle class.

In response to the March on Washington Movement led by A. Philip
Randolph, Roosevelt promulgated
Executive Order 8802 in June 1941,
which established the President's Committee on Fair Employment
Practices (FEPC) "to receive and investigate complaints of
discrimination" so that "there shall be no discrimination in the
employment of workers in defense industries or government because of
race, creed, color, or national origin."

GROWING EQUALITY OF INCOME

A major result of the full employment at high wages was a sharp, long
lasting decrease in the level of income inequality (Great Compression
). The gap between rich and poor narrowed dramatically in the area of
nutrition, because food rationing and price controls provided a
reasonably priced diet to everyone. White collar workers did not
typically receive overtime and therefore the gap between white collar
and blue collar income narrowed. Large families that had been poor
during the 1930s had four or more wage earners, and these families
shot to the top one-third income bracket. Overtime provided large
paychecks in war industries, and average living standards rose
steadily, with real wages rising by 44% in the four years of war,
while the percentage of families with an annual income of less than
$2,000 fell from 75% to 25% of the population.

In 1941, 40% of all American families lived on less than the $1,500
per year defined as necessary by the
Works Progress Administration for
a modest standard of living. The median income stood at $2,000 a year,
while 8 million workers earnt below the legal minimum. From 1939 to
1944, however, wages and salaries more than doubled, with overtime pay
and the expansion of jobs leading to a 70% rise in average weekly
earnings during the course of the war. Membership in organized labor
increased by 50% between 1941 and 1945, and because the War Labor
Board sought labor-management peace, new workers were encouraged to
participate in the existing labor organizations, thereby receiving all
the benefits of union membership such as improved working conditions,
better fringe benefits, and higher wages. As noted by William H. Chafe

"with full employment, higher wages and social welfare benefits
provided under government regulations, American workers experienced a
level of well-being that, for many, had never occurred before."

As a result of the new prosperity, consumer expenditures rose by
nearly 50%, from $61.7 billion at the start of the war to $98.5
billion by 1944. Individual savings accounts climbed almost sevenfold
during the course of the war. The share of total income held by the
top 5% of wage earners fell from 22% to 17%, while the bottom 40%
increased their share of the economic pie. In addition, during the
course of the war, the proportion of the American population earning
less than $3,000 (in 1968 dollars) fell by half.

LEGACY

The
New Deal was the inspiration for President Lyndon B. Johnson
's
Great Society in the 1960s. Johnson (on right) headed the Texas NYA
and was elected to Congress in 1938.

Analysts agree the
New Deal produced a new political coalition that
sustained the Democratic Party as the majority party in national
politics into the 1960s. A 2013 study found that "an average increase
in
New Deal relief and public works spending resulted in a 5.4
percentage point increase in the 1936 Democratic voting share, and a
smaller amount in 1940. The estimated persistence of this shift
suggests that
New Deal spending increased long-term Democratic support
by 2 to 2.5 percentage points. Thus, it appears that Roosevelt's
early, decisive actions created long-lasting positive benefits for the
Democratic party... The
New Deal did play an important role in
consolidating Democratic gains for at least two decades."

However, there is disagreement about whether it marked a permanent
change in values. Cowie and Salvatore in 2008 argued that it was a
response to depression and did not mark a commitment to a welfare
state because America has always been too individualistic. MacLean
rejected the idea of a definitive political culture. She says they
overemphasized individualism and ignored the enormous power that big
capital wields, the Constitutional restraints on radicalism, and the
role of racism, antifeminism, and homophobia. She warns that accepting
Cowie and Salvatore's argument that conservatism's ascendancy is
inevitable would dismay and discourage activists on the left. Klein
responds that the
New Deal did not die a natural death; it was killed
off in the 1970s by a business coalition mobilized by such groups as
the Business Roundtable, the Chamber of Commerce, trade organizations,
conservative think tanks, and decades of sustained legal and political
attacks.

Historians generally agree that during Roosevelt's 12 years in
office, there was a dramatic increase in the power of the federal
government as a whole. Roosevelt also established the presidency as
the prominent center of authority within the federal government.
Roosevelt created a large array of agencies protecting various groups
of citizens—workers, farmers, and others—who suffered from the
crisis, and thus enabled them to challenge the powers of the
corporations. In this way, the Roosevelt Administration generated a
set of political ideas—known as
New Deal liberalism—that remained
a source of inspiration and controversy for decades. New Deal
liberalism lay the foundation of a new consensus. Between 1940 and
1980 there was the liberal consensus about the prospects for the
widespread distribution of prosperity within an expanding capitalist
economy. Especially
Harry S. Truman 's
Fair Deal and in the 1960s,
Lyndon B. Johnson 's
Great Society used the
New Deal as inspiration
for a dramatic expansion of liberal programs.

The New Deal's enduring appeal on voters fostered its acceptance by
moderate and liberal Republicans.

As the first Republican president elected after Franklin D.
Roosevelt,
Dwight D. Eisenhower (1953–61) built on the
New Deal in a
manner that embodied his thoughts on efficiency and
cost-effectiveness. He sanctioned a major expansion of Social Security
by a self-financed program. He supported such
New Deal programs as
the minimum wage and public housing; he greatly expanded federal aid
to education and built the Interstate Highway system primarily as
defense programs (rather than jobs program). In a private letter
Eisenhower wrote:

Should any party attempt to abolish social security and eliminate
labor laws and farm programs, you would not hear of that party again
in our political history. There is a tiny splinter group of course,
that believes you can do these things ... Their number is negligible
and they are stupid.

In 1964
Barry Goldwater , an unreconstructed anti-New Dealer, was the
Republican presidential candidate on a platform that attacked the New
Deal. The Democrats under
Lyndon B. Johnson won a massive landslide
and Johnson's
Great Society programs extended the New Deal. However
the supporters of Goldwater formed the New Right which helped to bring
Ronald Reagan into the White House in the 1980 presidential election.
Reagan, once an ardent supporter of the New Deal, turned against it,
now viewing government as the problem rather than solution, and as
president moved the nation away from the
New Deal model of government
activism, shifting greater emphasis to the private sector.

HISTORIOGRAPHY AND EVALUATION OF NEW DEAL POLICIES

Historians debating the
New Deal have generally divided between
liberals who support it, conservatives who oppose it, and some New
Left historians who complain it was too favorable to capitalism and
did too little for minorities. There is consensus on only a few
points, with most commentators favorable toward the CCC and hostile
toward the NRA.

Consensus historians of the 1950s , such as
Richard Hofstadter ,
according to Lary May: believed that the prosperity and apparent
class harmony of the post-
World War II era reflected a return to the
true Americanism rooted in liberal capitalism and the pursuit of
individual opportunity that had made fundamental conflicts over
resources a thing of the past. They argued that the
New Deal was a
conservative movement that built a welfare state, guided by experts,
that saved rather than transformed liberal capitalism.

Liberal historians argue that Roosevelt restored hope and
self-respect to tens of millions of desperate people, built labor
unions, upgraded the national infrastructure and saved capitalism in
his first term when he could have destroyed it and easily nationalized
the banks and the railroads. Historians generally agree that, apart
from building up labor unions, the
New Deal did not substantially
alter the distribution of power within American capitalism. "The New
Deal brought about limited change in the nation's power structure."
The
New Deal preserved democracy in the United States in a historic
period of uncertainty and crises when in many other countries
democracy failed.

* The
New Deal vastly increased the federal debt (Billington and
Ridge) while liberal Keynesians criticize that the federal deficit
between 1933 and 1939 averaged only 3.7% which was not enough to
offset the reduction in private sector spending during the Great
Depression
* fostered bureaucracy and administrative inefficiency (Billington
and Ridge) and enlarged the powers of the federal government
* slowed the growth of civil service reform by multiplying offices
outside the merit system (Billington and Ridge)
* infringed upon free business enterprise (Billington and Ridge)
* rescued capitalism when the opportunity was at hand to nationalize
banking, railroads and other industries (
New Left critique)

NEUTRAL

* stimulated the growth of class consciousness among farmers and
workers (Billington and Ridge)
* raised the issue of how far economic regulation could be extended
without sacrificing the liberties of the people (Billington and Ridge)

BENEFICIAL:

* the nation came through its greatest depression without
undermining the capitalist system (Billington and Ridge)
* making the capitalist system more beneficial by enacting banking
and stock market regulations to avoid abuses and providing greater
financial security through, for example the introduction of Social
Security or the
Federal Deposit Insurance Corporation (David M.
Kennedy )
* created a better balance among labor, agriculture and industry
(Billington and Ridge)
* produced a more equal distribution of wealth (Billington and
Ridge)
* help conserve natural resources (Billington and Ridge)
* permanently established the principle that the national government
should take action to rehabilitate and preserve America's human
resources (Billington and Ridge)

FISCAL POLICY

_ national debt/ GNP climbs from 20% to 40% under Hoover; levels
off under Roosevelt; soars during
World War II from Historical States
US_ (1976).

Julian Zelizer (2000) has argued that fiscal conservatism was a key
component of the New Deal. A fiscally conservative approach was
supported by
Wall Street and local investors and most of the business
community; mainstream academic economists believed in it, as
apparently did the majority of the public. Conservative southern
Democrats, who favored balanced budgets and opposed new taxes,
controlled Congress and its major committees. Even liberal Democrats
at the time regarded balanced budgets as essential to economic
stability in the long run, although they were more willing to accept
short-term deficits. As Zelizer notes, public opinion polls
consistently showed public opposition to deficits and debt. Throughout
his terms, Roosevelt recruited fiscal conservatives to serve in his
Administration, most notably
Lewis Douglas the Director of Budget in
1933–1934, and
Henry Morgenthau Jr. , Secretary of the Treasury from
1934 to 1945. They defined policy in terms of budgetary cost and tax
burdens rather than needs, rights, obligations, or political benefits.
Personally the President embraced their fiscal conservatism.
Politically, he realized that fiscal conservatism enjoyed a strong
wide base of support among voters, leading Democrats, and businessmen.
On the other hand, there was enormous pressure to act – and spending
money on high visibility work programs with millions of paychecks a
week.

Douglas proved too inflexible, and he quit in 1934. Morgenthau made
it his highest priority to stay close to Roosevelt, no matter what.
Douglas's position, like many of the Old Right , was grounded in a
basic distrust of politicians and the deeply ingrained fear that
government spending always involved a degree of patronage and
corruption that offended his Progressive sense of efficiency. The
Economy Act of 1933, passed early in the Hundred Days, was Douglas's
great achievement. It reduced federal expenditures by $500 million, to
be achieved by reducing veterans' payments and federal salaries.
Douglas cut government spending through executive orders that cut the
military budget by $125 million, $75 million from the Post Office, $12
million from Commerce, $75 million from government salaries, and $100
million from staff layoffs. As Freidel concludes, "The economy program
was not a minor aberration of the spring of 1933, or a hypocritical
concession to delighted conservatives. Rather it was an integral part
of Roosevelt's overall New Deal."

Revenues were so low that borrowing was necessary (only the richest
3% paid any income tax between 1926 and 1940). Douglas therefore
hated the relief programs, which he said reduced business confidence,
threatened the government's future credit, and had the "destructive
psychological effects of making mendicants of self-respecting American
citizens". Roosevelt was pulled toward greater spending by Hopkins
and Ickes, and as the 1936 election approached he decided to gain
votes by attacking big business.

Morgenthau shifted with Roosevelt, but at all times tried to inject
fiscal responsibility; he deeply believed in balanced budgets, stable
currency, reduction of the national debt, and the need for more
private investment. The
Wagner Act met Morgenthau's requirement
because it strengthened the party's political base and involved no new
spending. In contrast to Douglas, Morgenthau accepted Roosevelt's
double budget as legitimate—that is a balanced regular budget, and
an "emergency" budget for agencies, like the WPA, PWA and CCC, that
would be temporary until full recovery was at hand. He fought against
the veterans' bonus until Congress finally overrode Roosevelt's veto
and gave out $2.2 billion in 1936. His biggest success was the new
Social Security program; he managed to reverse the proposals to fund
it from general revenue and insisted it be funded by new taxes on
employees. It was Morgenthau who insisted on excluding farm workers
and domestic servants from Social Security because workers outside
industry would not be paying their way.

The
New Deal expanded the role of the federal government,
particularly to help the poor, the unemployed, youth, the elderly, and
stranded rural communities. The Hoover administration started the
system of funding state relief programs, whereby the states hired
people on relief. With the CCC in 1933 and the WPA in 1935 the federal
government now became involved in directly hiring people on relief. in
granting direct relief or benefits. Total federal, state and local
spending on relief rose from 3.9% of GNP in 1929, to 6.4% in 1932, and
9.7% in 1934; the return of prosperity in 1944 lowered the rate to
4.1%. In 1935–40, welfare spending accounted for 49% of the federal,
state and local government budgets. In his memoirs, Milton Friedman
said that the
New Deal relief programs were an appropriate response.
He and his wife were not on relief but they were employed by the WPA
as statisticians. Friedman said that programs like the CCC and WPA
were justified as temporary responses to an emergency. Friedman said
that Roosevelt deserved considerable credit for relieving immediate
distress and restoring confidence.

RECOVERY

Economic Growth And Unemployment (1933–41)

WPA employed 2 to 3 million unemployed at unskilled labor.

In 1933 to 1941 the economy expanded at an average rate of 7.7% per
year. Despite high economic growth, unemployment rates fell slowly.

John Maynard Keynes explained that situation as an underemployment
equilibrium where skeptic business prospects prevent companies from
hiring new employees. It was seen as a form of cyclical unemployment .

There are different assumptions as well. According to Richard L.
Jensen , cyclical unemployment was a grave matter primarily until
1935. Between 1935 and 1941 structural unemployment became the bigger
problem. Especially the unions successes in demanding higher wages
pushed management into introducing new efficiency-oriented hiring
standards. It ended inefficient labor such as child labor, casual
unskilled work for subminimum wages, and sweatshop conditions. In the
long term the shift to efficiency wages led to high productivity, high
wages and a high standard of living. But it necessitated a
well-educated, well-trained, hard-working labor force. It was not
before war time brought full employment that the supply of unskilled
labor (that caused structural unemployment) downsized.

Heterodox Economics Interpretation

Libertarian Interpretation: Rather Harmful

Lowell E. Gallaway and Richard K. Vedder argue on the basis of
libertarian theories that the
Great Depression was caused by too high
wages which they say had caused a loss of depositor confidence which
caused the bank runs. They further conclude that the "Great
Depression was very significantly prolonged in both its duration and
its magnitude by the impact of
New Deal programs." They suggest that
without Social Security, work relief, unemployment insurance,
mandatory minimum wages, and without special government-granted
privileges for labor unions, business would have hired more workers
and the unemployment rate during the
New Deal years would have been
6.7% instead of 17.2%.
Amity Shlaes wrote that "from 1929 to 1940,
from Hoover to Roosevelt, government intervention helped to make the
Depression Great." Shlaes said that the NRA was misguided because it
used price setting to fix monetary problems. According to Shlaes,
Roosevelt's experimentation frightened business into inaction and
prevented recovery.
Eric Rauchway showed that Shlaes tried to
diminish the economic growth by referring to the unrepresentative Dow
Jones Industrial Average. He continued that usually a historian or
economist would have referred to the gross domestic product which,
according to the
Historical Statistics of the United States , grew
impressively by 9% annually during Roosevelt's first term and by 11%
annually after the short recession of 1937-38.

In a survey of economic historians conducted by Robert Whaples,
Professor of Economics at
Wake Forest University , anonymous
questionnaires were sent to members of the _Economic History
Association_. Members were asked to _disagree_, _agree_, or _agree
with provisos_ with the statement that read: "Taken as a whole,
government policies of the
New Deal served to lengthen and deepen the
Great Depression." While only 6% of economic historians who worked in
the history department of their universities agreed with the
statement, 27% of those that work in the economics department agreed.
Almost an identical percent of the two groups (21% and 22%) agreed
with the statement "with provisos" (a conditional stipulation), while
74% of those who worked in the history department, and 51% in the
economic department, disagreed with the statement outright.

Real Business-cycle Theory: Rather Harmful

Followers of the real business-cycle theory believe that the New Deal
caused the depression to persist longer than it would otherwise have.
Harold L. Cole and Lee E. Ohanian say Roosevelt's policies prolonged
the depression by seven years. According to their study, the "New
Deal labor and industrial policies did not lift the economy out of the
Depression but that the "
New Deal policies are an important
contributing factor to the persistence of the Great Depression." They
claim that the
New Deal "cartelization policies are a key factor
behind the weak recovery". They say that the "abandonment of these
policies coincided with the strong economic recovery of the 1940s".
The study by Cole and Ohanian is based on a real business cycle theory
model. The underlying assumptions of this theory are subject to
numerous criticisms and the theory is unable to posit any convincing
explanations for the initial causes of the Great Depression. Laurence
Seidman noted that according to the assumptions of Cole and Ohanian
the labor market clears instantaneously, which leads to the incredible
conclusion that the surge in unemployment between 1929 and 1932
(before the New Deal) was, in their opinion, both optimal and solely
based on voluntary unemployment. Additionally, Cole and Ohanian's
argument does not count workers employed through
New Deal programs.
Such programs built or renovated 2,500 hospitals, 45,000 schools,
13,000 parks and playgrounds, 7,800 bridges, 700,000 miles (1,100,000
km) of roads, 1,000 airfields and employed 50,000 teachers through
programs that rebuilt the country's entire rural school system.

At the beginning of the
Great Depression many economists
traditionally argued against deficit spending. The fear was that
government spending would "crowd out" private investment and would
thus not have any effect on the economy, a proposition known as the
Treasury view .
Keynesian economics rejected that view. They argued
that by spending vastly more money—using fiscal policy —the
government could provide the needed stimulus through the multiplier
effect . Without that stimulus business simply would not hire more
people, especially the low skilled and supposedly "untrainable" men
who had been unemployed for years and lost any job skill they once
had. Keynes visited the White House in 1934 to urge President
Roosevelt to increase deficit spending . Roosevelt afterwards
complained that, "he left a whole rigmarole of figures – he must be
a mathematician rather than a political economist."

The
New Deal tried public works, farm subsidies, and other devices to
reduce unemployment, but Roosevelt never completely gave up trying to
balance the budget. Between 1933 and 1941 the average federal budget
deficit was 3% per year. Roosevelt did not fully utilize deficit
spending. The effects of federal public works spending were largely
offset by Herbert Hoover's large tax increase in 1932, whose full
effects for the first time were felt in 1933, and it was undercut by
spending cuts, especially the Economy Act. According to Keynesians
like
Paul Krugman the
New Deal therefore was not as successful in the
short run as it was in the long run.

Following the Keynesian consensus (that lasted until the 1970s) the
traditional view was that federal deficit spending associated with the
war brought full-employment output while monetary policy was just
aiding the process. In this view the
New Deal did not end the Great
Depression but halted the economic collapse and ameliorated the worst
of the crises.

Monetarist Interpretation

Milton Friedman

In recent years more influential among economists has been the
monetarist interpretation of
Milton Friedman , which includes a
full-scale monetary history of what he calls the "Great Contraction".
Friedman concentrated on the failures before 1933. He points out that
between 1929 and 1932, the
Federal Reserve allowed the money supply to
fall by a third which is seen as the major cause that turned a normal
recession into a Great Depression. Friedman especially criticized the
decisions of Hoover and the Fed not to save banks going bankrupt.
Monetarists state that the banking and monetary reforms were a
necessary and sufficient response to the crises. They reject the
approach of Keynesian deficit spending.

You have to distinguish between two classes of
New Deal policies. One
class of
New Deal policies was reform: wage and price control, the
Blue Eagle, the national industrial recovery movement. I did not
support those. The other part of the new deal policy was relief and
recovery ... providing relief for the unemployed, providing jobs for
the unemployed, and motivating the economy to expand ... an expansive
monetary policy. Those parts of the
New Deal I did support.

Bernanke And Parkinson: Cleared The Way For A Natural Recovery

Ben Bernanke and
Martin Parkinson declared in "Unemployment,
Inflation, and Wages in the American Depression" (1989) that "the New
Deal is better characterized as having cleared the way for a natural
recovery (for example, by ending deflation and rehabilitating the
financial system) rather than as being the engine of recovery itself."

New Keynesian Economics: Crucial Source Of Recovery

Challenging the traditional view monetarists and New Keynesians like
J. Bradford DeLong ,
Lawrence Summers and
Christina Romer argued that
recovery was essentially complete prior to 1942 and that monetary
policy was the crucial source of pre-1942 recovery. The extraordinary
growth in money supply beginning in 1933 lowered real interest rates
and stimulated investment spending. According to Bernanke there was
also a debt-deflation effect of the depression which was clearly
offset by a reflation through the growth in money supply. But before
1992 scholars did not realize that the
New Deal provided for a huge
aggregate demand stimulus through a de facto easing of monetary
policy. While
Milton Friedman and
Anna Schwartz argued in "Monetary
History of the United States" (1963) that the
Federal Reserve System
had made no attempt to increase the quantity in high-powered money and
thus failed to foster recovery they somehow did not investigate the
impact of the monetary policy of the New Deal. In 1992 Christina Romer
explained in "What Ended the Great Depression?" that the rapid growth
in money supply beginning in 1933 can be traced back to a large
unsterilized gold inflow to the US which was partly due to political
instability in Europe but to a larger degree to the revaluation of
gold through the Gold Reserve Act. The Roosevelt administration had
chosen not to sterilize the gold inflow precisely because they hoped
that the growth of money supply would stimulate the economy.

Replying to DeLong et al. in the _Journal of Economic History_, J. R.
Vernon argues that deficit spending leading up to and during World War
II still played a large part in the overall recovery, according to his
study "half or more of the recovery occurred during 1941 and 1942."

According to
Peter Temin , Barry Wigmore, Gauti B. Eggertsson and
Christina Romer the biggest primary impact of the
New Deal on the
economy and the key to recovery and to end the
Great Depression was
brought about by a successful management of public expectations. The
thesis is based on the observation that after years of deflation and a
very severe recession important economic indicators turned positive
just in March 1933 when Roosevelt took office. Consumer prices turned
from deflation to a mild inflation, industrial production bottomed out
in March 1933, investment doubled in 1933 with a turnaround in March
1933. There were no monetary forces to explain that turnaround. Money
supply was still falling and short-term interest rates remained close
to zero. Before March 1933 people expected a further deflation and
recession so that even interest rates at zero did not stimulate
investment. But when Roosevelt announced major regime changes people
began to expect inflation and an economic expansion. With those
expectations, interest rates at zero began to stimulate investment
just as they were expected to do. Roosevelt's fiscal and monetary
policy regime change helped to make his policy objectives credible.
The expectation of higher future income and higher future inflation
stimulated demand and investments. The analysis suggests that the
elimination of the policy dogmas of the gold standard, a balanced
budget in times of crises and small government led endogenously to a
large shift in expectation that accounts for about 70–80 percent of
the recovery of output and prices from 1933 to 1937. If the regime
change had not happened and the Hoover policy had continued, the
economy would have continued its free-fall in 1933, and output would
have been 30 percent lower in 1937 than in 1933.

REFORM

Francis Perkins looks on as Roosevelt signs the National Labor
Relations Act .

The economic reforms were mainly intended to rescue the capitalist
system by providing a more rational framework in which it could
operate. The banking system was made less vulnerable. The regulation
of the stock market and the prevention of some corporate abuses
relating to the sale of securities and corporate reporting addressed
the worst excesses. Roosevelt allowed trade unions to take their place
in labor relations and created the triangular partnership between
employers, employees and government.

David M. Kennedy wrote that "the achievements of the
New Deal years
surely played a role in determining the degree and the duration of the
postwar prosperity ".

Paul Krugman stated that the institutions built by the New Deal
remain the bedrock of the United States economic stability. Against
the background of the
2007–2012 global financial crisis he explained
that the financial crises would have been much worse if the New Deals
Federal Deposit Insurance Corporation had not insured most bank
deposits and older Americans would have felt much more insecure
without Social Security . Libertarian economist
Milton Friedman after
1960 attacked Social Security from a free market view stating that it
had created welfare dependency .

The
New Deal banking reform was weakened since the 1980s. The repeal
of the Glass-Steagall Act in 1999 allowed the shadow banking system to
grow rapidly. Since it was neither regulated nor covered by a
financial safety net the shadow banking system was central to the
Financial crisis of 2007–08 and the subsequent
Great Recession .

IMPACT ON FEDERAL GOVERNMENT AND STATES

While it is essentially consensus among historians and academics that
the
New Deal brought about a large increase in the power of the
federal government, there has been some scholarly debate concerning
the results of this federal expansion. Historians like Arthur M.
Schlesinger and James T. Patterson have argued that the augmentation
of the federal government exacerbated tensions between the federal and
state governments. However, contemporaries such as
Ira Katznelson have
suggested that, due to certain conditions on the allocation of federal
funds, namely that the individual states get to control them, the
federal government managed to avoid any tension with states over their
rights. This is a prominent debate concerning the historiography of
federalism in the United States and, as Schlesinger and Patterson have
observed, the
New Deal marked an era when the federal-state power
balance shifted further in favor of the federal government, which
heightened tensions between the two levels of government in the United
States.

Ira Katznelson has argued that although the federal government
expanded its power and began providing welfare benefits on a scale
previously unknown in the United States, it often allowed individual
states to control the allocation of the funds provided for such
welfare. This meant that the states controlled who had access to these
funds, which in turn meant many southern states were able to racially
segregate – or in some cases, like a number of counties in Georgia,
completely exclude African-Americans—the allocation of federal
funds. This enabled these states to continue to relatively exercise
their rights and also to preserve the institutionalization of the
racist order of their societies. While Katznelson has conceded that
the expansion of the federal government had the potential to lead to
federal-state tension, he has argued it was avoided as these states
managed to retain some control. As Katznelson has observed,
"furthermore, they had to manage the strain that potentially might be
placed on local practices by investing authority in federal
bureaucracies… To guard against this outcome, they key mechanism
deployed was a separation of the source of funding from decisions
about how to spend the new monies."

However, Schlesinger has disputed Katznelson's claim and has argued
that the increase in the power of the federal government was perceived
to come at the cost of states' rights, thereby aggravating state
governments, which exacerbated federal-state tensions. Schlesinger has
utilized quotes from the time to highlight this point, for example,
Schlesinger has observed, "the actions of the New Deal, Mills said,
"abolish the sovereignty of the States. They make of a government of
limited powers one of unlimited authority over the lives of us all."

Moreover, Schlesinger has argued that this federal-state tension was
not a one-way street, and that the federal government became just as
aggravated with the state governments, as they did with it. State
governments were often guilty of inhibiting or delaying federal
policies. Whether through intentional methods, like sabotage, or
unintentional ones, like simple administrative overload; either way
these problems aggravated the federal government and thus heightened
federal-state tensions. As Schlesinger has also noted, "students of
public administration have never taken sufficient account of the
capacity of lower levels of government to sabotage or defy even a
masterful President."

James T. Patterson has reiterated this argument, however he observes
that this increased tension can be accounted for not just from a
political perspective, but from an economic one, too. Patterson has
argued that the tension between the federal and state governments
also, at least partly, resulted from the economic strain under which
the states had been put by the federal government's various policies
and agencies. Some states were either simply unable to cope with the
federal government's demand, and thus refused to work with them, or
admonished the economic restraints and actively decided to sabotage
federal policies. This was demonstrated, Patterson has noted, with the
handling of federal relief money by Ohio governor, Martin L. Davey.
The case in Ohio became so detrimental to the federal government that
Harry Hopkins, supervisor of the Federal Emergency Relief
Administration, had to federalize Ohio relief. Although this argument
differs somewhat from Schlesinger's, the source of federal-state
tension remained the growth of the federal government. As Patterson
has asserted, "though the record of the FERA was remarkably
good—almost revolutionary—in these respects, it was inevitable,
given the financial requirements imposed on deficit-ridden states,
that friction would develop between governors and federal officials."

In this dispute it can be inferred that Katznelson and, Schlesinger
and Patterson, have only disagreed on their inference of the
historical evidence. While both parties have agreed that the federal
government expanded and, even, that states had a degree of control
over the allocation of federal funds, they have disputed the
consequences of these claims. Katznelson has asserted that it created
mutual acquiescence between the levels of government, while
Schlesinger and Patterson have suggested that it provoked contempt for
the state governments on the part of the federal government, and vice
versa, thus exacerbating their relations. In short, irrespective of
the interpretation this era marked an important time in the
historiography of federalism and also nevertheless provided some
narrative on the legacy of federal-state relations.

RACE AND GENDER

African Americans

While many Americans suffered economically during the Great
Depression, African Americans also had to deal with social ills, such
as racism, discrimination, and segregation . Black workers were
especially vulnerable to the economic downturn since most of them
worked the most marginal jobs such as unskilled or service-oriented
work. Therefore, they were the first to be discharged. Additionally
many employers preferred white workers. When jobs were scarce some
employers even dismissed blacks to create jobs for whites. In the end
there were three times more African American workers on public
assistance or relief than white workers.

The WPA, NYA, and CCC relief programs allocated 10% of their budgets
to blacks (who comprised about 10% of the total population, and 20% of
the poor). They operated separate all-black units with the same pay
and conditions as white units. Some leading white New Dealers,
especially
Eleanor Roosevelt , Harold Ickes , and Aubrey Williams
worked to ensure blacks received at least 10% of welfare assistance
payments. However, these benefits were small in comparison to the
economic and political advantages that whites received. Most unions
excluded blacks from joining. Enforcement of anti-discrimination laws
in the South was virtually impossible, especially since most blacks
worked in hospitality and agricultural sectors.

The
New Deal programs put millions of Americans immediately back to
work or at least helped them to survive. The programs were not
specifically targeted to alleviate the much higher unemployment rate
of blacks. Some aspects of the programs were even unfavorable to
blacks. The Agricultural Adjustment Acts for example helped farmers
which were predominantly white but reduced the need of farmers to hire
tenant farmers or sharecroppers which were predominantely black. While
the AAA stipulated that a farmer had to share the payments with those
who worked the land this policy was never enforced. The Farm Service
Agency (FSA), a government relief agency for tenant farmers, created
in 1937, made efforts to empower African Americans by appointing them
to agency committees in the South. Senator James F. Byrnes of South
Carolina raised opposition to the appointments because he stood for
white farmers who were threatened by an agency that could organize and
empower tenant farmers. Initially, the FSA stood behind their
appointments, but after feeling national pressure FSA was forced to
release the African Americans of their positions. The goals of the FSA
were notoriously liberal and not cohesive with the southern voting
elite. Some
New Deal measures inadvertently discriminated against
harmed blacks. Thousands of blacks were thrown out of work and
replaced by whites on jobs where they were paid less than the NRA's
wage minimums because some white employers considered the NRA's
minimum wage "too much money for Negroes." By August 1933, blacks
called the NRA the "Negro Removal Act." An NRA study found that the
NIRA put 500,000 African Americans out of work.

But since blacks felt the sting of the depression´s wrath even more
severely than whites they welcomed any help. Until 1936 almost all
African Americans (and many whites) shifted from the "Party of
Lincoln" to the Democratic Party. This was a sharp realignment from
1932, when most African Americans voted the Republican ticket. New
Deal policies helped establish a political alliance between blacks and
the Democratic Party that survives into the 21st century.

There was no attempt whatsoever to end segregation, or to increase
black rights in the South. Roosevelt appointed an unprecedented number
of blacks to second-level positions in his administration; these
appointees were collectively called the
Black Cabinet .

The wartime FEPC executive orders that forbade job discrimination
against African Americans, women, and ethnic groups was a major
breakthrough that brought better jobs and pay to millions of minority
Americans. Historians usually treat FEPC as part of the war effort and
not part of the
New Deal itself.

Segregation

The
New Deal was racially segregated; blacks and whites rarely worked
alongside each other in
New Deal programs. The largest relief program
by far was the WPA; it operated segregated units, as did its youth
affiliate the NYA. Blacks were hired by the WPA as supervisors in the
North; however of 10,000 WPA supervisors in the South, only 11 were
black. Historian Anthony Badger argues, "
New Deal programs in the
South routinely discriminated against blacks and perpetuated
segregation. In its first few weeks of operation, CCC camps in the
North were integrated. By July 1935, however, practically all the
camps in the United States were segregated, and blacks were strictly
limited in the supervisory roles they were assigned. Kinker and Smith
argue that "even the most prominent racial liberals in the New Deal
did not dare to criticize Jim Crow."

Secretary of the Interior Harold Ickes was one of the Roosevelt
Administration's most prominent supporters of blacks and former
president of the Chicago chapter of the NAACP. In 1937 when Senator
Josiah Bailey Democrat of North Carolina accused him of trying to
break down segregation laws, Ickes wrote him to deny that: I think it
is up to the states to work out their social problems if possible, and
while I have always been interested in seeing that the Negro has a
square deal, I have never dissipated my strength against the
particular stone wall of segregation. I believe that wall will crumble
when the Negro has brought himself to a high educational and economic
status…. Moreover, while there are no segregation laws in the North,
there is segregation in fact and we might as well recognize this.

The New Deal's record came under attack by
New Left historians in the
1960s for its pusillanimity in not attacking capitalism more
vigorously, nor helping blacks achieve equality. The critics emphasize
the absence of a philosophy of reform to explain the failure of New
Dealers to attack fundamental social problems. They demonstrate the
New Deal's commitment to save capitalism and its refusal to strip away
private property. They detect a remoteness from the people and
indifference to participatory democracy, and call instead for more
emphasis on conflict and exploitation.

Women And The New Deal

FERA camp for unemployed women, Maine, 1934.

At first the
New Deal created programs primarily for men. It was
assumed that the husband was the "breadwinner " (the provider) and if
they had jobs, whole families would benefit. It was the social norm
for women to give up jobs when they married; in many states there were
laws that prevented both husband and wife holding regular jobs with
the government. So too in the relief world, it was rare for both
husband and wife to have a relief job on FERA or the WPA. This
prevailing social norm of the breadwinner failed to take into account
the numerous households headed by women, but it soon became clear that
the government needed to help women as well.

Many women were employed on FERA projects run by the states with
federal funds. The first
New Deal program to directly assist women was
the
Works Progress Administration (WPA), begun in 1935. It hired
single women, widows, or women with disabled or absent husbands. While
men were given unskilled manual labor jobs, usually on construction
projects, women were assigned mostly to sewing projects. They made
clothing and bedding to be given away to charities and hospitals.
Women also were hired for the WPA's school lunch program.

Both men and women were hired for the arts programs (such as music,
theater and writing). The Social Security program was designed to help
retired workers and widows, but did not include domestic workers,
farmers or farm laborers, the jobs most often held by blacks. Social
Security however was not a relief program and it was not designed for
short-term needs, as very few people received benefits before 1942.

Worldwide, the
Great Depression had the most profound impact in the
German Reich and the United States. In both countries the pressure to
reform and the perception of the economic crisis were strikingly
similar. When Hitler came to power he was faced with exactly the same
task that faced Roosevelt, overcoming mass unemployment and the global
Depression. The political responses to the crises were essentially
different: while American democracy remained strong, Germany replaced
democracy with fascism, a Nazi dictatorship.

The initial perception of the
New Deal was mixed. On the one hand the
eyes of the world were upon America, because many democrats in Europe
and the United States saw in Roosevelt´s reform program a positive
counterweight to the seductive powers of the two great alternative
systems, communism and fascism. As the historian
Isaiah Berlin wrote
in 1955, "The only light in the darkness was the administration of Mr.
Roosevelt and the
New Deal in the United States."

By contrast, enemies of the
New Deal sometimes called it "fascist",
but they meant very different things. Communists denounced the New
Deal in 1933 and 1934 as fascist, meaning it was under the control of
big business. They dropped that line of thought when Stalin switched
to the "Popular Front" plan of cooperation with liberals.

In 1934, Roosevelt defended himself against those critics in a
"fireside chat". Some people, he said:

will try to give you new and strange names for what we are doing.
Sometimes they will call it 'Fascism', sometimes 'Communism',
sometimes 'Regimentation', sometimes 'Socialism'. But, in so doing,
they are trying to make very complex and theoretical something that is
really very simple and very practical.... Plausible self-seekers and
theoretical die-hards will tell you of the loss of individual liberty.
Answer this question out of the facts of your own life. Have you lost
any of your rights or liberty or constitutional freedom of action and
choice?

After 1945 only few observers continued to see similarities. Later on
some scholars such as
Kiran Klaus Patel ,
Heinrich August Winkler and
John Garraty came to the conclusion that comparisons of the
alternative systems don´t have to end in an apology for Nazism since
comparisons rely on the examination of both similarities and
differences. Their preliminary studies on the origins of the fascist
dictatorships and the American (reformed) democracy came to the
conclusion that besides essential differences "the crises led to a
limited degree of convergence" on the level of economic and social
policy. The most important cause was the growth of state
interventionism since in the face of the catastrophic economic
situation both societies no longer counted on the power of the market
to heal itself.

John Garraty wrote that the
National Recovery Administration (NRA)
was based on economic experiments in Nazi Germany and Fascist Italy,
without establishing a totalitarian dictatorship. Contrary to that
historians such as Hawley have examined the origins of the NRA in
detail, showing the main inspiration came from Senators Hugo Black and
Robert F. Wagner and from American business leaders such as the
Chamber of Commerce. The model for the NRA was Woodrow Wilson's War
Industries Board , in which Johnson had been involved too. Historians
argue that direct comparisons between Fascism and
New Deal are invalid
since there is no distinctive form of fascist economic organization.
Gerald Feldman wrote that fascism has not contributed anything to
economic thought and had no original vision of a new economic order
replacing capitalism. His argument correlates with Mason´s that
economic factors alone are an insufficient approach to understand
fascism and that decisions taken by fascists in power cannot be
explained within a logical economic framework. In economic terms both
ideas were within the general tendency of the 1930s to intervene in
the free-market capitalist economy, at the price of its laissez-faire
character, "to protect the capitalist structure endangered by
endogenous crises tendencies and processes of impaired
self-regulation".

Stanley Payne , a historian of fascism, examined possible fascist
influences in the United States by looking at the KKK and its
offshoots, and movements led by Father Coughlin and
Huey Long . He
concluded that "the various populist, nativist, and rightist movements
in the United States during the 1920s and 1930s fell distinctly short
of fascism." According to
Kevin Passmore , lecturer in History at
Cardiff University , the failure of fascism in the United States was
due to the social policies of the
New Deal that channelled
anti-establishment populism into the left rather than the extreme
right.

CHARGES OF CONSERVATISM

For decades the
New Deal was generally held in very high regard in
the scholarship and the textbooks. That changed in the 1960s when New
Left historians began a revisionist critique that said the New Deal
was a bandaid for a patient that needed radical surgery to reform
capitalism, put private property in its place, and lift up workers,
women and minorities. The
New Left believed in participatory democracy
and therefore rejected the autocratic machine politics typical of the
big city Democratic organizations.

In the 1960s, "
New Left " historians have been among the New Deal's
harsh critics. Barton J. Bernstein, in a 1968 essay, compiled a
chronicle of missed opportunities and inadequate responses to
problems. The
New Deal may have saved capitalism from itself,
Bernstein charged, but it had failed to help – and in many cases
actually harmed – those groups most in need of assistance. Paul K.
Conkin in _The New Deal_ (1967) similarly chastised the government of
the 1930s for its weak policies toward marginal farmers, for its
failure to institute sufficiently progressive tax reform, and its
excessive generosity toward select business interests.
Howard Zinn ,
in 1966, criticized the
New Deal for working actively to actually
preserve the worst evils of capitalism.

By the 1970s liberal historians were responding with a defense of the
New Deal based on numerous local and microscopic studies. Praise
increasingly focused on Eleanor Roosevelt, seen as a more appropriate
crusading reformer than her husband. Since then research on the New
Deal has been less interested in the question of whether the New Deal
was a "conservative", "liberal", or "revolutionary" phenomenon than in
the question of constraints within which it was operating.

Political sociologist
Theda Skocpol , in a series of articles, has
emphasized the issue of "state capacity" as an often-crippling
constraint. Ambitious reform ideas often failed, she argued, because
of the absence of a government bureaucracy with significant strength
and expertise to administer them. Other more recent works have
stressed the political constraints that the
New Deal encountered.
Conservative skepticism about the efficacy of government was strong
both in Congress and among many citizens. Thus some scholars have
stressed that the
New Deal was not just a product of its liberal
backers, but also a product of the pressures of its conservative
opponents.

COMMUNISTS IN GOVERNMENT

During the
New Deal the Communists established a network of a dozen
or so members working for the government.
Harold Ware led the largest
group which worked in the Agriculture Adjustment Administration (AAA).
Secretary of Agriculture Wallace got rid of them all in a famous purge
in 1935. Ware died in 1935 and some individuals such as Alger Hiss
moved to other government jobs. Other Communists worked for the
National Labor Relations Board, the National Youth Administration, the
Works Progress Administration, the Federal Theater Project, the
Treasury, and the Department of State.

The issue of Communists in government became a favorite conservative
attacking point in the late 1930s. In 1938 Congressman Martin Dies , a
Texas Democrat, and his newly created House Un-American Activities
Committee investigated Communist subversion of labor unions and gained
national headlines. In 1935–39, American Communist followed Stalin's
"Popular front" approach and supported the New Deal. The Party's
membership grew as it exercised greater influence and achieved new
acceptance; it operated as a pressure group on the
New Deal political
coalition. The most important Party base in the Congress of Industrial
Organizations (CIO), but by 1937 the CIO was spending much of its
energy battling the older, more conservative American Federation of
Labor (AFL). Klehr (1984) argues that the American Communist Party of
the 1930s obediently followed directives from Moscow and suppressed
individual initiative. In 1939 the Communists suddenly reversed
course within days of the agreement between Hitler and Stalin in
August that signaled friendship between the two bitter enemies. The
Communists now denounced all enemies of Hitler and especially attacked
President Roosevelt as a war-monger for his support for Britain in its
war against Germany. Many members quit the Party in disgust.

POLITICAL METAPHOR

Since 1933, politicians and pundits have often called for a "new
deal" regarding an object. That is, they demand a completely new,
large-scale approach to a project. As Arthur A. Ekirch Jr. (1971) has
shown, the
New Deal stimulated utopianism in American political and
social thought on a wide range of issues. In Canada, Conservative
Prime Minister Richard B. Bennett in 1935 proposed a "new deal" of
regulation, taxation, and social insurance that was a copy of the
American program; Bennett's proposals were not enacted, and he was
defeated for reelection in October 1935. In accordance with the rise
of the use of U.S. political phraseology in Britain, the Labour
Government of
Tony Blair termed some of its employment programs "new
deal", in contrast to the Conservative Party's promise of the 'British
Dream'.

WORKS OF ART AND MUSIC

The federal government commissioned a series of public murals
from the artists it employed.
William Gropper 's "Construction of a
Dam" (1939), is characteristic of much of the art of the 1930s, with
workers seen in heroic poses, laboring in unison to complete a great
public project.

The
Works Progress Administration subsidized artists, musicians,
painters and writers on relief with a group of projects called Federal
One . While the WPA program was by far the most widespread, it was
preceded by three programs administered by the US Treasury which hired
commercial artists at usual commissions to add murals and sculptures
to federal buildings. The first of these efforts was the short-lived
Public Works of Art Project , organized by Edward Bruce , an American
businessman and artist. Bruce also led the Treasury Department's
Section of Painting and Sculpture (later renamed the Section of Fine
Arts) and the
Treasury Relief Art Project (TRAP). The Resettlement
Administration (RA) and
Farm Security Administration (FSA) had major
photography programs. The
New Deal arts programs emphasized
regionalism , social realism , class conflict , proletarian
interpretations, and audience participation. The unstoppable
collective powers of common man, contrasted to the failure of
individualism , was a favorite theme. "Created Equal": Act I
Scene 3 "Spirit of 1776": Boston (Federal Theater Project, 1935).

Post Office murals and other public art, painted by artists in this
time, can still be found at many locations around the U.S. The New
Deal particularly helped American novelists. For journalists, and the
novelists who wrote non-fiction, the agencies and programs that the
New Deal provided, allowed these writers to describe about what they
really saw around the country.

Many writers chose to write about the New Deal, and whether they were
for or against it, and if it was helping the country out. Some of
these writers were Ruth McKenney, Edmund Wilson, and Scott Fitzgerald.
Another subject that was very popular for novelists was the condition
of labor. They ranged from subjects on social protest, to strikes.

Under the WPA, the Federal Theatre project flourished. Countless
theatre productions around the country were staged. This allowed
thousands of actors and directors to be employed, among them were
Orson Welles, and John Huston.

The FSA photography project is most responsible for creating the
image of the Depression in the U.S. Many of the images appeared in
popular magazines. The photographers were under instruction from
Washington as to what overall impression the
New Deal wanted to give
out. Director
Roy Stryker 's agenda focused on his faith in social
engineering , the poor conditions among cotton tenant farmers, and the
very poor conditions among migrant farm workers; above all he was
committed to social reform through
New Deal intervention in people's
lives. Stryker demanded photographs that "related people to the land
and vice versa" because these photographs reinforced the RA's position
that poverty could be controlled by "changing land practices". Though
Stryker did not dictate to his photographers how they should compose
the shots, he did send them lists of desirable themes, such as
"church", "court day", "barns".

Films of the late
New Deal era such as _
Citizen Kane _ (1941)
ridiculed so-called "great men", while the heroism of the common man
appeared in numerous movies, such as _The Grapes of Wrath _ (1940).
Thus in
Frank Capra 's famous films, including _Mr. Smith Goes to
Washington _ (1939), _
Meet John Doe _ (1941) and _It\'s a Wonderful
Life _ (1946), the common people come together to battle and overcome
villains who are corrupt politicians controlled by very rich, greedy
capitalists.

By contrast there was also a smaller but influential stream of
anti-
New Deal art.
Gutzon Borglum 's sculptures on Mount Rushmore
emphasized great men in history (his designs had the approval of
Calvin Coolidge ).
Gertrude Stein and
Ernest Hemingway disliked the
New Deal and celebrated the autonomy of perfected written work as
opposed to the
New Deal idea of writing as performative labor. The
Southern Agrarians celebrated a premodern regionalism and opposed the
TVA as a modernizing, disruptive force.
Cass Gilbert , a conservative
who believed architecture should reflect historic traditions and the
established social order, designed the new Supreme Court building
(1935). Its classical lines and small size contrasted sharply with the
gargantuan modernistic federal buildings going up in the Washington
Mall that he detested. Hollywood managed to synthesize liberal and
conservative streams, as in
Busby Berkeley 's _Gold Digger_ musicals,
where the storylines exalt individual autonomy while the spectacular
musical numbers show abstract populations of interchangeable dancers
securely contained within patterns beyond their control.

NEW DEAL PROGRAMS

The
New Deal had many programs and new agencies, most of which were
universally known by their initials . Most were abolished during World
War II ; others remain in operation today. They included the
following:

*
Federal Emergency Relief Administration (FERA) a Hoover program to
create unskilled jobs for relief; expanded by Roosevelt and Harry
Hopkins ; replaced by WPA in 1935.
*
United States bank holiday , 1933: closed all banks until they
became certified by federal reviewers
* Abandonment of gold standard , 1933: gold reserves no longer
backed currency; still exists
*
Civilian Conservation Corps (CCC), 1933–1942: employed young men
to perform unskilled work in rural areas; under United States Army
supervision; separate program for Native Americans
* Homeowners Loan Corporation (HOLC) helped people keep their homes,
the government bought properties from the bank allowing people to pay
the government instead of the banks in installments they could afford,
keeping people in their homes and banks afloat.
*
Tennessee Valley Authority (TVA), 1933: effort to modernize very
poor region (most of
Tennessee ), centered on dams that generated
electricity on the
Tennessee River ; still exists
*
Agricultural Adjustment Act (AAA), 1933: raised farm prices by
cutting total farm output of major crops and livestock; replaced by a
new AAA because the Supreme Court ruled it unconstitutional.
*
National Industrial Recovery Act (NIRA), 1933: industries set up
codes to reduce unfair competition, raise wages and prices; ended
1935. The US Supreme Court ruled the NIRA unconstitutional
*
Public Works Administration (PWA), 1933: built large public works
projects; used private contractors (did not directly hire unemployed).
Ended 1938.
*
Federal Deposit Insurance Corporation (FDIC) insures bank deposits
and supervises state banks; still exists
*
Glass–Steagall Act regulates investment banking; repealed 1999
(not repealed, only two provisions changed)
*
Securities Act of 1933 , created the SEC, 1933: codified standards
for sale and purchase of stock, required awareness of investments to
be accurately disclosed; still exists FERA camp for unemployed
black women, Atlanta, 1934
*
Civil Works Administration (CWA), 1933–34: provided temporary
jobs to millions of unemployed
*
Indian Reorganization Act , 1934: moved away from assimilation;
policy dropped
*
Social Security Act (SSA), 1935: provided financial assistance to:
elderly, handicapped, paid for by employee and employer payroll
contributions; required 7 years contributions, so first payouts were
in 1942; still exists
*
Works Progress Administration (WPA), 1935: a national labor
program for more than 2 million unemployed; created useful
construction work for unskilled men; also sewing projects for women
and arts projects for unemployed artists, musicians and writers; ended
1943.
*
National Labor Relations Act (NLRA) / Wagner Act, 1935: set up
National Labor Relations Board to supervise labor-management
relations; In the 1930s, it strongly favored labor unions . Modified
by the
Taft-Hartley Act (1947); still exists
*
Judicial Reorganization Bill , 1937: gave the President power to
appoint a new Supreme Court judge for every judge 70 years or older;
failed to pass Congress
*
Federal Crop Insurance Corporation (FCIC), 1938: Insures crops and
livestock against loss of production or revenue. Was restructured
during the creation of the
Risk Management Agency in 1996 but
continues to exist.
* Surplus Commodities Program (1936); gives away food to poor; still
exists as the
Supplemental Nutrition Assistance Program
*
Fair Labor Standards Act 1938: established a maximum normal work
week of 44 hours and a minimum wage of 40 cents/hour and outlawed most
forms of child labor; still exists, hours have been lowered to 40
hours over the years.

"Most indexes worsened until the summer of 1932, which may be called
the low point of the depression economically and psychologically."
Economic indicators show the American economy reached nadir in summer
1932 to February 1933, then began recovering until the recession of
1937–1938. Thus the
Federal ReserveIndustrial Production Index hit
its low of 52.8 on 1932-07-01 and was practically unchanged at 54.3 on
1933-03-01; however by 1933-07-01, it reached 85.5 (with 1935–39 =
100, and for comparison 2005 = 1,342). In Roosevelt's 12 years in
office, the economy had an 8.5% compound annual growth of GDP, the
highest growth rate in the history of any industrial country,
however, recovery was slow; by 1939, Gross Domestic Product (GDP) per
adult was still 27% below trend.

* Best, Gary Dean. _The Nickel and Dime Decade: American Popular
Culture during the 1930s_ (1993) online
* Cooney, Terry A. _Balancing Acts: American Thought and Culture in
the 1930s_ (Twayne, 1995)
* Dickstein, Morris. _Dancing in the Dark: A Cultural History of the
Great Depression_ (2009)
* Eldridge, David Nicholas. _American Culture in the 1930s_
(Edinburgh University Press, 2008) online
* Kelly, Andrew. _Kentucky by Design: The Decorative Arts, American
Culture, and the Federal Art Project's Index of American Design_
(University Press of Kentucky, 2015)
* McKinzie, Richard. _The
New Deal for Artists_ (1984), well
illustrated scholarly study
* Mathews, Jane De Hart (1975). "Arts and the People: The New Deal
Quest for a Cultural Democracy". _Journal of American History_. 62:
316–39.
JSTOR 1903257 .
* Pells, Richard. _Radical Visions and American Dreams: Culture and
Social Thought in the Depression Years_ (1973).
* Roddick, Nick. _A
New Deal in Entertainment: Warner Brothers in
the 1930s_ (London, BFI, 1983).
* Shlaes, Amity. _The Forgotten Man: A New History of the Great
Depression_ (2007), a conservative approach
* Shindler, Colin. _Hollywood in Crisis: Cinema and American
Society, 1929–1939_ (Routledge, 1996).
* Stott, William. _Documentary Expression and Thirties America_
(University of Chicago Press, 1973).
* Wecter, Dixon. _The Age of the Great Depression, 1929–1941_
(1948), social history

POLITICS

* Alswang, John. _The
New Deal and American Politics_ (1978), voting
analysis
* Alter, Jonathan. _The Defining Moment: FDR's Hundred Days and the
Triumph of Hope_ (2006), popular account
* Badger, Anthony J. _FDR: The First Hundred Days_ (2008)
* Badger, Anthony J. _
New Deal / New South: An Anthony J. Badger
Reader_ (2007)
* Bernstein, Barton J. "The New Deal: The Conservative Achievements
of Liberal Reform". In Barton J. Bernstein, ed., _Towards a New Past:
Dissenting Essays in American History_, pp. 263–88. (1968), an
influential
New Left attack on the New Deal.
* Best, Gary Dean. _The Critical Press and the New Deal: The Press
Versus Presidential Power, 1933–1938_ (1993) ISBN 0-275-94350-X
* Best, Gary Dean. _Retreat from Liberalism: Collectivists versus
Progressives in the
New Deal Years_ (2002) ISBN 0-275-94656-8
* Brinkley, Alan. _The End of Reform:
New Deal Liberalism in
Recession and War_. (1995) what happened after 1937
* Cobb, James and Michael Namaroto, eds. _The
New Deal and the
South_ (1984).
* Conklin, Paul K. "The Myth of
New Deal Radicalism" in _Myth
America: A Historical Anthology, Volume II_. 1997. Gerster, Patrick,
and Cords, Nicholas. (editors.) Brandywine Press, ISBN 1-881089-97-5
* Domhoff, G. William, and Michael J. Webber. _Class and Power in
the New Deal: Corporate Moderates, Southern Democrats, and the
Liberal-Labor Coalition_ (Stanford University Press; 2011) 304 pp.
uses class dominance theory to examine the Agricultural Adjustment
Act, the National Labor Relations Act, and the Social Security Act.
* Ekirch Jr., Arthur A. _Ideologies and Utopias: The Impact of the
New Deal on American Thought_ (1971)
* Fraser, Steve and Gary Gerstle, eds., _The Rise and Fall of the
New Deal Order_, (1989), essays focused on the long-term results.
* Garraty, John A (1973). "The New Deal, National Socialism, and the
Great Depression". _American Historical Review_. 78 (4): 907–44.
JSTOR 1858346 .
* Higgs, Robert. _Crisis and Leviathan: Critical Episodes in the
Growth of American Government_ (1987), libertarian critique
* Ladd, Everett Carll and Charles D. Hadley. _Transformations of the
American Party System: Political Coalitions from the
New Deal to the
1970s_ (1975), voting behavior
* Lowitt, Richard. _The
New Deal and the West_ (1984).
* Manza; Jeff (2000). "Political Sociological Models of the U.S. New
Deal". _Annual Review of Sociology: 2000_. 26: 297–322. doi
:10.1146/annurev.soc.26.1.297 .
* Milkis, Sidney M. and Jerome M. Mileur, eds. _The
New Deal and the
Triumph of Liberalism_ (2002)
* Rosen, Eliot A. _The Republican Party in the Age of Roosevelt:
Sources of Anti-Government Conservatism in the United States_ (2014)
* Sitkoff, Harvard. _A
New Deal for Blacks: The Emergence of Civil
Rights as a National Issue: The Depression Decade_ (2008)
* Smith, Jason Scott. _Building
New Deal Liberalism: The Political
Economy of Public Works, 1933–1956_ (2005).
* Szalay, Michael. _
New Deal Modernism: American Literature and the
Invention of the
Welfare State_ (2000)
* Tindall George B. _The Emergence of the New South, 1915–1945_
(1967). survey of entire South
* Trout Charles H. _Boston, the Great Depression, and the New Deal_
(1977)
* Venn, Fiona (1998). _The New Deal_. Edinburgh: Edinburgh
University Press. ISBN 1-57958-145-5 .
* Ware, Susan. _Beyond Suffrage: Women and the New Deal_ (1981)
* Williams, Gloria-Yvonne. (2014). "African-Americans and the
Politics of Race During the New Deal." In _The
New Deal and the Great
Depression_ (pp. 131–44). Kent, OH:Kent State University Press. on
academia.edu author\'s page
* Williams, Mason B. _City of Ambition: FDR, La Guardia, and the
Making of Modern New York_ (2013)

* The
Living New Deal Project, a digital database of the lasting
effects of the
New Deal founded in the Department of Geography at the
University of California, Berkeley
* The Smithsonian American Art Museum\'s Exhibition "1934: A New
Deal for Artists"
* Art, Culture, and Government: The
New Deal at 75 Library of
Congress ,
American Folklife Center Documentation of